Insurance Stocks: The insurance sector had a lot of expectations from the budget. Union Finance Minister Nirmala Sitharaman made a big announcement for the insurance sector in the budget and she has completely opened it for foreign investors, that is, now 100 percent FDI can come in this sector but with a special condition.
Insurance Stocks: Union Finance Minister Nirmala Sitharaman today announced a game changer for the insurance sector in the budget. She has completely opened the country’s insurance sector to foreign investors and now 100 percent FDI can come in this sector. Earlier this limit was 74 percent. Due to this, the shares of insurance sector’s leading companies LIC, HDFC Life, New India Assurance, SBI Life, ICICI Prudential Life and Star Health jumped by three percent.
Only these investors will get the benefit of 100% FDI rule
Finance Minister Nirmala Sitharaman announced to increase the FDI limit in the insurance sector from 74 percent to 100 percent. However, she further said that this increased limit will be applicable only to those investors who will invest their entire premium in India.
Moody’s listed these benefits
On the announcement of the Finance Minister, Moody’s Ratings said that increasing the FDI limit in the insurance sector will improve the profit margin. Huge capital will come into this sector and the financial reserve will be strengthened. Apart from this, more companies of this sector can be listed in the market. Insurance companies were already hoping that the FDI limit could be increased. The government had earlier proposed changes in the Insurance Act, 1938 to increase this limit, but now the Finance Minister has finally announced it.
Now the insurance sector is waiting for these reliefs
Axis Securities had suggested reducing the GST rate on health and term insurance before the budget to make them more affordable. Apart from this, the brokerage firm had also suggested increasing the tax exemption limit to encourage the purchase of insurance policies. Now since these were not discussed in the budget, the wait for them has become longer at the moment. However, the Finance Minister has said that the new Income Tax Bill will be presented next week, so analysts will keep an eye on it to see whether there is any change in the tax exemption limit or not.
